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The Pound Sterling rises toward 1.3460 against the US Dollar after President Trump dismisses Fed Governor Cook.
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The unexpected move raises concerns about the Federal Reserve's independence.
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Market focus shifts to BoE’s Catherine Mann for potential insights on future monetary policy.
The Pound Sterling (GBP) edged higher toward 1.3460 against the US Dollar (USD) in Tuesday’s European session, as the greenback weakened following U.S. President Donald Trump’s dismissal of Federal Reserve (Fed) Governor Lisa Cook. The move has sparked renewed concerns over the central bank’s independence.
Early Tuesday, Trump posted a letter on Truth Social announcing Cook’s removal, accusing her of making false statements regarding mortgage agreements. The decision has drawn criticism from market analysts, who argue that it threatens the Fed's autonomy and reflects an attempt to install pro-Trump figures on the Federal Open Market Committee (FOMC) to align with his economic policies.
“The concern is the intent of the Trump administration: it’s not to preserve Fed integrity, it’s to install Trump’s own people at the Fed,” analysts at Capital.com told Reuters.
Despite the announcement, Cook responded through her attorneys, stating she will continue to perform her duties and that Trump lacks the legal authority to fire her without cause.
Trump has a history of challenging the Fed’s independence, having previously pressured Chair Jerome Powell over interest rate decisions. Interestingly, he recently praised Powell after a dovish speech at the Jackson Hole Symposium, where Powell cited labor market risks as a key reason for potential rate cuts.
Daily Market Movers Digest: Pound Sterling Steady Ahead of BoE Mann’s Speech
- The Pound Sterling (GBP) remains broadly stable in Tuesday’s European session, as investors await a key speech by Bank of England (BoE) Monetary Policy Committee (MPC) member Catherine Mann at 16:00 GMT. Traders are keen to hear Mann’s insights for any clues on whether the BoE is likely to introduce further interest rate cuts this year.
- While some market participants expect the BoE to maintain its policy stance due to persistent inflation, others remain cautious. UK inflation has shown signs of re-acceleration in recent months, raising doubts about the central bank’s ability to ease monetary conditions further. Notably, Mann voted to hold rates in the BoE’s most recent meeting, where the bank opted for a narrow 25 basis-point cut, bringing the key rate down to 4%.
- Across the Atlantic, market focus is on Friday’s upcoming U.S. Personal Consumption Expenditures (PCE) Price Index report for July. This inflation metric is closely watched by the Federal Reserve and could significantly shape expectations for the next policy move. According to the CME FedWatch Tool, markets are currently pricing in an 84% probability of a rate cut at the Fed’s September meeting. Dovish sentiment has been fueled by recent labor data, including downward revisions to May and June’s Nonfarm Payrolls.
Technical Outlook: GBP/USD Holds Near 20-day EMA
Technically, the GBP/USD pair trades mildly higher around 1.3460, clinging to the 20-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) remains range-bound between 40 and 60, signaling reduced directional momentum.
On the downside, immediate support lies at the August 11 low of 1.3400. A break below this level could invite further losses. On the upside, the July 1 high near 1.3790 remains a critical resistance zone to watch.
